G E Money and Secret Commissions

[frustrated46]

Hi,

Just to let you know that I am about to issue 2 Claims against GE Money (then Ocwen) for 2 secured loans taken out on our house in 1999/2000. These claims are possible because, after a professional audit, it was clear that we paid both a stated commission and secret commission on each loan. On one loan the broker's disclosed commission was £2,300 and the undisclosed commission was £4,500 - on a loan of approx £40,000. Both loans were redemned when we sold the house.

I am claiming all associated costs of the loans, in fact, everything except the capital sum, and eight/nine years interest. This gives claims of approximately £25,000 and £30,000.

As per the Hurstanger case, the undisclosed commissions are a breach of fiduciary duty and a form of bribe. Am I one of this first to do this?

Frustrated.

[Bona]

Good for you keep us posted

[andrew1]

Sub Prime Mortgages/loans and secret commission


As a matter of interest, on what grounds do you feel you have to claim all the interest back as a result of this? can you explain your line of thinking and what backs it up at all because I know a number of people who have requested info from brokers.

I'm glad this is coming out into the open, going to be a few brokers with sticky nick knocks after they start seeing people onto this .

Sarah

[frustrated46]

Okay. About me: just finished Law Degree (2:1) at Birkbeck in London. Only reason to do this was a feeling of lack of power and irritation. Buffeted by the institutional contempt of financial institutions. Knowledge is power and I really do get quite irritated. Collected monies taken from my accounts by NatWest a few years ago, etc..

In the case of G E Money/Ocwen the grounds are as follows: Our audits show two separate commissions to the broker on each loan; one disclosed and one not disclosed. The courts will take their lead from the Hurstanger case. The defendants in Hurstanger were not allowed redress because it was not a "true secret commission case", ie. their documentation stated that the broker "might be paid" a commission and that was enough to negate secrecy. In addition, even if there is no such statement, the customer should ask themselves what the broker is living on if he does not receive commission, and should be responsible enough to ask about commission.

However, in our case, the documentation shows quite clearly a commission of £2,500 to the broker. Being aware of this disclosed commission we would be entitled to believe that this was the brokers only return and we entered into the contract in that belief. The exposure of the undisclosed commission (much larger) would, reading the judge's explanation in Hurstanger make ours a true secret commission case. The remedies, as described in H, are "the amount of the bribe or for damages for fraud where he can recover the amount of any actual loss sustained by entering into the transaction in respect of the bribe given".

We are going for damages for fraud; the actual loss sustained includes any amount except the capital amount. So all interest, penalties, disclosed broker fee, undisclosed broker fee, legal fees, settlement charge, admin charges, completion costs, etc. These amounts are our financial loss caused by entering into a fraudulent contract.

Frustrated

[frustrated46]

In addition, the court will ask, would we have entered into the contract for a £40,000 loan knowing the real total commission was approximately £6,500? A sum which does not even take into account the interest and fees of the lender. And were there more favourable loan arrangements that we could have entered into? And did our broker not reveal these other loan arrangements to us in a clear breach of his fiduciary duty because the return to him was greater if we signed up to the G E Money/Ocwen loans?

If the secret commission is established, the broker is in breach of his fiduciary duty and the lender is jointly liable. The courts have defined the way forward, but, as yet, I don't think that a provable case of secret commission has allowed the courts to follow through on the judgement given by Tuckey LJ in Hurstanger.

Frustrated

Frustrated

[andrew1]

Thanks frustrated, I'll watch this with interest.


Sarah